Some years ago I had a client known by all as “Tex”.
Tex was a cowboy of the trucking industry.
When Tex paid me a visit with a bunch of folders under his arm, I knew each story would start with a description of his offending driver as “this f#$%ing d*&$h@#$!”.
Example A: The driver reversed over a parked car, which the driver says shouldn’t have been there.
Example B: The driver drove under a “too low bridge” (bridge’s fault), causing damage to truck and bridge.
Example C: The vehicle in front was driving too slowly, so the driver drove into the back of it.
Unhappy Tex needed these problems sorted.
You are a lucky employer if you haven’t had to pay out money to fix an employee’s mistake.
You are not human if in such circumstances you haven’t thought “do I really have to pay for this?”
Generally, the answer is yes, you do.
Under the principle of vicarious liability, an employer is liable for the acts of their employees which cause loss or harm to others, if those acts were “in the course of employment”.
The employee can be jointly liable with their employer unless the employer has either agreed to indemnify the employee from such claims in a written contract of employment or where an implication to do so can be drawn – such as where the liability arises from the employee acting upon the employer’s express direction.
In New South Wales there is legislation that expressly provides that employers must indemnify employees from damages claims made against them, provided they have not engaged in “serious and willful misconduct” or if the act was not in the course of their employment.
It is usual for the employer to “carry the can” even in instances of joint liability because the employer will usually (hopefully!) be the insured party.
Can the employee be solely liable?
- If the employee engaged in serious and willful misconduct
- If the employer has taken reasonable steps to prevent the conduct of the employee
- If the negligent act did not occur in the course of employment.
Tex could leave his dopy drivers to face the music alone if there was no obligation to indemnify them and:
Example A: If Tex’s driver had argued with the driver of the parked car and reversed over their car in an incident of “road rage revenge” – this is “serious and willful misconduct” and did not occur “within the course of employment”.
Example B: If Tex had expressly forbidden his drivers to use the low-bridge route because it was well-known that the bridge was too low for Tex’s trucks to pass safely beneath and it can be proven that the driver knew of the prohibition – Tex might be said to have taken “reasonable steps”.
Example C: If the driver wasn’t making a delivery for Tex, but was undertaking some clandestine deliveries without Tex’s permission – this journey was not within the “course of employment”. Tex might also have installed speed limiters in this truck, which would automatically slow it down in such circumstances – if the driver had de-activated this without Tex’s knowledge or consent, then Tex would not be liable as Tex would have taken “reasonable steps”.